Why Apple reversed course on smaller tablets with the iPad mini

Tomorrow Apple is holding a product launch event in San Jose, and almost the entire technology world is expecting the company to unveil a new, smaller version of its top-selling iPad tablet, just in time for the holidays. For the record, we expect Apple also has another thing or two up its sleeve — and Digital Trends will be covering the event so you can stay at the head of the curve.

However, there’s one major problem with a (still hypothetical) smaller version of the iPad: Apple’s late co-founder Steve Jobs apparently hated the idea, famously saying that a 7-inch tablet would need to ship with sandpaper so users could file down their fingertips to touch on-screen keys and buttons. But Apple has never been afraid of changing its mind, and clearly the mobile world has changed since Jobs railed against smaller tablets.

With those changes in mind, what can we expect from Apple tomorrow?

The most likely scenario

The basic elements of a smaller iPad are pretty easy to guess. Apple isn’t going to try to re-invent the monstrously-successful iOS and iPad ecosystem with a radical new device. Instead, it’s is far more likely to build on what it’s already accomplished with the iPad, iPhone, and iPod touch and expand the ecosystem to include one more category of touch-oriented device.

Screen: A smaller iPad tablet will most likely have a 7.85-inch display. That puts it in line with other e-readers and media tablets on the market, and neatly splits the difference between the iPhone/iPod touch lines and the full 10.1-inch iPad.

We’re willing to bet a smaller iPad will have a 1,024 x 768 pixel display, and not a “Retina” display like those found in recent iPhones, the iPad 3, and Apple’s latest MacBook Pro. It might seem non-sensical for a new iPad not to have a Retina display when Apple has been pushing high-rez displays across its product lines — after all, a Retina screen has become a selling point for Apple’s top-selling products. However, a 1,024 x 768 pixel display will still have a density of 163 pixels per inch on a 7.85-inch display — which isn’t too shabby — and means Apple can both save money on the cost of the display in a smaller iPad and keep the graphics processing and power consumption needs of that display to a minimum. That means longer battery life. A 1,024 x 768 pixel screensize also means the device would be compatible with all existing iPad apps (and the vast majority of iPhone apps).

Processor: We’re also willing to bet that a new, smaller iPad will sport Apple’s A5X processor — the same chip at the heart of the iPad 3 — and not the more-powerful Apple A6 processor at the heart of the iPhone 5. Again, in part this will be a cost-reduction move — Apple can make the A5X in quantity more cheaply than the A6 right now. But it’s also because the A5X is no slouch itself: it can handle screens with four times as many pixels (the iPad 3) and it’s powerful enough to support Apple’s voice-driven virtual assistant Siri. It’s more than enough to handle a (hypothetical) smaller iPad.

Lightning connector: One thing from the iPhone 5 (plus the new iPod touch and iPod nano) that we do expect Apple to roll into a new tablet offering is the new Lightning connector. True, it requires an adapter to use Lightning connectors with the range of iOS peripherals based on the 30-pin dock connector, but Apple isn’t going to be wishy-washy about the Lightning connector. It needs a simpler, thinner connector so it can continue to shrink iOS devices going forward. The Lightning connector lets Apple make a smaller iPad thinner (and probably lighter) than its predecessors.

Big questions

The basic outlines of a smaller iPad are pretty obvious, but that doesn’t mean there aren’t plenty of grey areas. Here are our biggest questions.

4G, or not 4G?: In the United States, Apple’s 10.1-inch iPad 3 is available with optional 4G LTE connectivity from either Verizon Wireless or AT&&T: The contract-free service starts at $15 for 250MB of data from AT&T or $20 a month for 1GB of data from Verizon. (The same prices apply to no-contract 3G service on the iPad 2.) However, perhaps more importantly, an iPad with mobile wireless capability costs $130 more than the same iPad with just Wi-Fi.

We think Apple will probably offer the same $130 4G LTE option with a smaller iPad as it does with the existing iPad line. Plenty of potential customers will be happy with just Wi-Fi connectivity, but folks who actually need mobile broadband for a tablet device aren’t going to balk at paying the same price for it on a smaller iPad as they would for mobile connectivity on the current iPad or the iPad 2. (Heck, the $130-for-mobile price tag goes all the way back to the original iPad.)

Storage: We think a new, smaller iPad won’t debut with anything less than 16GB of storage: that’s the entry threshold for the iPad 2 and the entry-level iPad 3. We expect Apple will also offer a version with 32GB of storage, and wouldn’t put 64GB out of the question since all the rest of Apple’s iOS devices stretch out that far. Although there has been some speculation that Apple will offer a smaller version of the iPad with just 8GB of storage to save costs, that scenario seems unlikely: Apple is one of the largest (perhaps the largest) purchasers of flash storage on the planet: the cost difference between equipping a new iPad model with 8GB or 16GB of storage is not very material. Furthermore (see below) a smaller iPad is almost certainly going to focus on apps, games, and media consumption (including storage-heavy media like movies). iPad apps — even if they aren’t made for a Retina display — can be huge: 16GB of storage is a smarter starting point than 8GB.

Pricing: More than specs, the number everyone is waiting for on a hypothetical smaller iPad is its price. Industry consensus seems to be that it has to cost less than the “standard” iPad (which begins at $500) and be competitive with other 7-inch tablets on the market like the Google Nexus 7 and the Kindle Fire HD 7, both of which start at $200.

Some consider $250 to be a “sweet spot” for smaller iPad pricing — although there’s some potential for confusion there, too. Apple’s latest iPod touch starts at $300, although the previous model is still available for $200. That $300 price tag is $100 more than 7-inch tablets from Google and Amazon, and it can be difficult to explain to people how a device with a smaller screen can be a better deal than a cheaper 7-inch tablet unless those customers place a high value on portability. (And, to be sure, those new iPod touches are very portable: they’re less than a quarter inch thick.) However, given the size and depth of the iOS application and content ecosystem, Apple can probably make an argument that a smaller iPod is worth $50 more than a tablet from Amazon or Google — especially to people who are already Apple customers — particularly if the smaller iPad is substantially lighter and thinner than competitors.

9to5Mac created a stir this weekend by reporting the new, smaller iPads will start at a $330 price point. Although no one will know until Apple unveils pricing tomorrow, the $330 price point seems high. Initially, we thought that it may represent pricing for a smaller iPad with mobile broadband — a version without cellular connectivity would therefore be cheaper. If that impression plays out, that might put the intro price of a smaller iPad at $200. That seems unlikely. Although Amazon and Google are selling tablets at that price point, they’re doing so essentially at cost, they’re doing so hoping to make a profit on the sales of content. Apple’s business model is the opposite: its content ecosystem generates little or no profit, while hardware sales fill the company’s coffers. If Apple makes a smaller iPad that costs $200 to make, Apple is not going to sell it for $200. Apple has always been more concerned with profits than market share.

What about the iPad 2?: The introduction of a new, smaller iPad could be the end of the line for the iPad 2, which is still on sale starting at $400. However, Apple doesn’t seem to be having any trouble selling the iPad 2, even though it’s more expensive than a variety of newer competitors on the market. If I were to guess, I’d bet Apple keeps the iPad 2 around and perhaps knocks $50 off the price. The main argument for discontinuing the iPad 2 with the introduction of a smaller iPad is just to avoid clutter (and hence, confusion) in Apple’s tablet line.

The name: So far, the technology press has been calling a hypothetical smaller iPad the “iPad mini,” following along the naming conventions established by the iPod mini and Mac mini. However, as John Gruber over at Daring Fireball points out, that omits another Apple naming convention: Air.

If Apple’s smaller iPad reflects the super-slim design unveiled with the most recent iPod touch, Apple could convincingly call the device the iPad Air. That also avoids branding it as a diminutive (and, hence, less valuable) version of the iPad, and could establish a smaller iPad as a new class of device — perhaps one that could command a $330 premium in a 7-inch tablet market where devices start at $199.

Reasons Apple reversed course on 7-inch tablets

During an earnings call two years ago, late Apple co-founder Steve Jobs articulated the reasons Apple wasn’t considering a smaller version of the iPad. Some of Jobs’ objections boiled down to:

Apple’s user testing showed a tablet interface scaled down to a 7-inch screen was substantially less usable than the iPad’s 10-inch display (this was the infamous “sandpaper” point).

The 7-inch screen size is less than half the physical display size of the 10-inch iPad, and is just too small to make great tablet apps.

Every tablet user is also a smartphone user so making a tablet more portable isn’t necessary: folks already have a portable device they take with them everywhere.

A few things have changed. First of all, not every tablet user is a smartphone user. Perhaps the pre-eminent example is students, who may use/own tablets for school as part of their curriculum, but who may not be smartphone users. (Similarly, plenty of kids have tablets for entertainment and games, but don’t own smartphones.) There are also plenty of folks who use tablets for entertainment, apps, and reading — perhaps just using Wi-Fi connectivity.

Second, tablets aren’t just about great tablet apps anymore: they’re about media consumption. It’s no coincidence that the primary use of devices like the Kindle Fire HD and the Google Nexus 7 are not being positioned as general purpose computing devices but as media consumption devices enabling people to read books, listen to music, and watch television and movies anywhere they go. It may be difficult to build interactive, touch-centric tablet applications that work and look great on a 7-inch screen. But if all you’re doing is sitting back and watching video — or flipping to the next page— 7-inch tablet usually works just fine. In fact, it probably works better than a full 10-inch tablet, because it’s lighter and easier to manage with one hand. The media consumption angle also speaks to Jobs’ first point about 7-inch tablets: when the tablet becomes more of a passive media consumption device, they don’t need a sophisticated touch-based interfaces. A few simple controls will usually do the trick.

As a result, it’s a fair bet a smaller iPad from Apple will focus on m media consumption, and also try to further expand the iOS user base beyond smartphone owners. One example would be students: children are less likely to have problems using a touch interface on a 7-inch device because they tend to have small, dextrous hands — and if a new smaller iPad were substantially less expensive than current offerings, the iPad could see even stronger adoption in schools. Although this is the wrong time of year to be introducing a product for the education market — October introductions are always about the end-of-year holiday buying season — a smaller, less-expensive iPad would tie in neatly with Apple’s textbook-centric iBooks 2 initiative, announced way back at the beginning of 2012.

What do you think?

So what do you think? Will a smaller iPad be all about trying to beat Amazon and Google out at the lower end of the tablet market? Or does Apple have other tricks up its sleeve that will keep let the iPad keep dominating the tablet market—and raking in most of the profits?